Market Language :: Finch Freeman

All markets have their own language, and the commercial property market is no exception.

The following terms are generally used in the process of leasing an office, and are often confusing for those new to the industry. For explanations of more general real estate terms, visit our glossary.

Base Date
A reference date for determining increases in outgoings.
Construction Certificate
Approval from the relevant Authorities for carrying out building work on the premises, usually for fitout.
Development Approval
Approval from the Local Council or other relevant authority for the proposed use of the premises.
An inducement offered by the landlord to attract a tenant to the premises. Can be offered in a variety of ways e.g. rent free, provision of fitout, etc.
Lettable Area
* Net Lettable Area (NLA) NLA (measured in square metres) is the floor space between the internal finished surfaces of permanent internal walls and the internal finished surfaces of dominant portions of the permanent outer building walls. It generally includes window frames and structural columns and excludes toilets, cupboards, plant / motor rooms and tea rooms where they are provided as standard facilities in the building. It also excludes areas dedicated as public spaces or thoroughfares such as foyers.
Gross Lettable Area (GLA) GLA is the floor space contained within each tenancy at each floor level by measuring from the dominant portion of the outside faces of walls, to the centre line of internal common area / inter-tenancy walls.
Make Good
The Tenant’s obligation to reinstate the tenancy at the expiry of the lease. The extent to which you are required to reinstate can vary dramatically. Often a fitout must be removed at the end pf a lease and any damage caused during the period of occupation or in removing fit out must be rectified.
The Tenant’s right to a new lease for an agreed term at the expiry of the initial lease.
Statutory Outgoings include costs such as municipal rates, water and sewerage rates and usage charges, car park levies and land tax. General Outgoings are all non-statutory costs associated with operation, upkeep and / or maintenance of the building e.g. air conditioning, common area cleaning and electricity.
Ratchet Clause
The mechanism whereby rent upon review cannot fall below a given figure.
Gross Effective Rent is the rent payable under the lease taking all incentives into account and including all building outgoings. Gross Face Rent is the rent payable under the lease excluding any incentives but including all building outgoings. Net Rent is rental excluding any building outgoings. A Gross Rent is inclusive of outgoings.
Rent Review
The method by which your rent can vary during the term of the lease. Can either be a market review, a predetermined figure or fixed to an index such as the CPI.

Approval from the local council or other relevant authority for a change to the zoning of the premises.
Sublease or Assignment
The mechanism under the provisions of the lease which allows for the Tenant to find a suitable replacement tenant subject to Landlord approval.
Work Space Ratios
The total net lettable area divided by the number of employees. Average Work Space Ratios very between 1:10 – 1:22 square metres.